Person to person (P2P) payment systems allow an individual to send money electronically with his or her computer or mobile device to another person. Once the sender's P2P account has been established and the P2P recipients have been identified, the P2P system offers the convenience of being able to send money electronically to another person by following a few steps. The sender authenticates (e.g., via log in, pin, or biometric authentication) to his or her account, elects to make a P2P payment, enters the payment amount and payment date, enters and/or selects a recipient (via a list of pre-defined P2P recipients or by entering contact information for a new recipient), selects a method of notification, and then takes an action (such as hitting a button) to trigger or initiate sending of the payment.
If the recipient has a P2P account with the same bank or P2P payment service, the process for the recipient can be completed with a few steps in a short period of time. The recipient receives a notification by email or text, authenticates to his or her account, accepts the money (or has it automatically deposited without the need to accept the money), and receives a confirmation that the payment has been deposited into his or her account.
The experience for the recipient, however, can be significantly more cumbersome if he or she does not have a P2P account with the same bank or P2P payment service as the sender. In this case, the recipient must enroll for a P2P recipient account with the sender's bank or P2P payment service, which typically involves many steps and can take a number of days. The recipient first must go to a P2P website of the sender's bank or P2P payment service and input his or her personal information including name and contact information such as address, phone number, and email address. The P2P system then verifies the recipient's contact information (e.g., by texting a verification code to the recipient's mobile device or by sending a verification code to the recipient by email) and asking the recipient to confirm his or her identity. The process may also require the recipient to answer security questions. After the sender's P2P system has verified the recipient's identity, the recipient must then register and verify his or her receiving bank account. This account verification process requires the recipient to enter the routing number and the account number, which generally means that the recipient must have his or her checkbook and identify the routing number and account number within the MICR line at the bottom of the check. The recipient then specifies whether the account is a checking account or savings account, personal or business, and the name of the bank. The sender's P2P system typically performs an account verification (solutions include depositing two small payments into the account, which may take a few business days for the deposits to show up on the account and to verify the deposit amounts for the P2P account registration). In all, the process from the recipient's perspective may be prohibitively slow and involved, particularly if it is all just to receive a small payment (e.g., $10 reimbursement to your friend who paid for lunch). These and other drawbacks have imposed significant limitations on the adoption of P2P payment systems.